earticle

영어

Recent studies highlight positive political effects on firm performance and stock returns. This paper shows that the positive value impact on the cross-sectional stock returns disappears in the lame duck presidency periods, defined as the last two years before the Presidential party change. We find that this phenomenon is not explained by other election characteristics. Additional tests suggest that the diminishing political effect in the lame duck periods is more pronounced for the small firms that are less able to hedge policy risk away and for the firms located in the states where residents more strongly support the President.